My wife and I recently found out we’lll be adding to our family! We are beyond excited to add to our family and look forward to so many fun times. We are still extremely early in the process but we were talking about longer term things last night and we came to a realization, we don’t know who will watch our children now.
That in itself is not a big deal. My wife only works part time. The issue is can we find anyone to watch our children? The way I work, whether it be right or wrong, is to think thru the worst case scenario, and see if I can make that acceptable. In this case the worst case scenario is that my wife quits working and stays home with our children. This is a big deal.
Doing some rough math, this would leave us losing roughly a grand in cash flow per month (after taxes). The way I have set up our finances is we utilize my income to pay the bills, invest in our HSA and invest in retirement. We have utilized her income since day 1 to pay off debt or put directly into savings for future wealth creation (more to come on this in the future).
This news wasn’t great and the worst case scenario is doable but not ideal. With only a single income our margin for error in our monthly budget and general sense of security will drop significantly. I’m sure something will work out so that we don’t need to face the worst case but it is not pretty to think about. One thing that gives me assurance is that cash is king and I’ve got a hefty savings account set aside.
Whats your worst case scenario? Have you thought through it? Do you have the financial means to make it through? While these are the types of things that aren’t exactly fun to think about, its necessary to run through these thought experiments every once in a while.